[While] the price of gold has gone up for 12 straight years, and is on pace to make it 13 when this year comes to a close, it seems that despite all of the gold bugs calling for the metal to surge to unbelievable highs, major financial institutions are calling for the gold bubble to finally burst in the coming months. [Let’s examine what they and others have to say.] Words: 450
So says Jared Cummans (http://commodityhq.com) in edited excerpts from his original article* entitled Gold’s 12 Year Run May Finally Be Over.
Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) andwww.munKNEE.com (Your Key to Making Money!), may have further edited ([ ]), abridged (…) and/or reformatted (some sub-titles and bold/italics emphases) the article below for the sake of clarity and brevity to ensure a fast and easy read. The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement.
The Anti-Gold Sentiment
Being bearish on gold in the last decade has probably left you with your tail between your legs, as it has been one of the best performing assets out there. Its safe haven appeal and ability to keep pace with inflation has made it a staple product in many portfolios, but some of the biggest names on Wall Street are calling for the metal to finally endure a contraction:
Citigroup has called for gold to experience mild gains in 2013 to average about $1,750/oz, but sees it falling in 2014.
Goldman Sachs is calling for the average gold price to take a hit in 2014.
BNP Paribas recently cut its outlook for gold in the next two years, and similarly agrees that the precious metal will rise in 2013, only to pull back in 2014 as the bubble finally gives way.
Most of the forecasts cite a stronger U.S. economy in the coming years, as we finally work our way out of the 2008 recession. Goldman specifically pointed out that the shale gas revolution will mean that crude oil can no longer hinder global growth and that global economies will be able to move swiftly forward. The IMF predicted the global economy to grow 3.6% in the coming year; a jump from 2012′s 3.3%.
What About Inflation?
The above forecasts all seem to call for a similar move in gold, citing global growth and a higher risk appetite in the investing world but what about the prospect of inflation?
With money printing and stimulus packages in place in a number of different countries, it seems likely that inflation will have to pick up at some point in the near future, and some argue that it already has. Even if the global economy finds its footing, rising inflation has the potential to put gold back on the bull path. Then again, a strong economy with curbed inflation will almost certainly put pressure on gold prices.
The only question left is which phenomenon will be more prominent: inflation or global economic growth.
I view the current market weakness in gold, coupled with the pullback in trader positions, as a shorting opportunity which is strong in terms of reward vs. risk. I have come to that conclusion by questioning the assumptions that many make about it, isolating its fundamental drivers and providing a trading recommendation as to where I believe the price is headed in the future. Let me share my analyses with you. (Words: 1440; Charts: 4; Tables: 1)
Have you been too busy to stay informed about the unusual developments in gold this week? Not to worry! Here are 5 of the “best of the best” articles selected from 100s posted on the internet this week. Each article has been edited for the sake of clarity and brevity to ensure you a fast and easy read. Enjoy!
We live very busy lives these days and, as such, often don’t have the time to stay informed about developments on the financial, economic and investment scenes as they develop each day. Here are just 10 of the “best of the best” articles that were selected from the 100s posted on the internet this past week. Each article has been edited for the sake of clarity and brevity to ensure you a fast and easy read. Enjoy!
Our subscription service provides detailed technical analysis of where the price of gold, silver and precious metal stocks are going short term (in the next week or two), intermediate term (within the next 3-6 months) and long term (the ultimate top) in each stage of their respective bull runs. This service comes with detailed charting based on conventional technical analysis and our proprietary fractal analysis based on the ’70s. Below are some of our latest comments and rationale for expected price movements in gold without illustative charts which are only available to subscribers. Words: 1000
We’ve been surprised at the recent action in the precious metals complex. During the recent correction the shares were showing quite a bit more strength than the metals. Then the shares took a dive below support yet the metals maintained their recent lows! How do we interpret this wild volatility in the relationship between the shares and the metals? Quite often we look at daily and weekly charts. Now is the time to take a look at the monthly charts which can help us get a better read on the larger trends at hand. Words: 636
With President Obama being re-elected we can expect four more years of a Washington-centric controlled economy with a rolling program of borrow, print, spend and pretend; similar to the last four years….[What affect will such fiscal irresponsibility have on the U.S. dollar, gold and silver? Read on!] Words: 717
Nobody knows when the final crisis will occur, but like so many times throughout human history we are marching down a narrow path to the final catastrophe of our fiat currency system. [Let me explain why.] Words: 1336
What is developing in the markets is not the beginning of another leg down in gold, but a second chance to get positioned for what should be a very profitable intermediate degree rally over the next 2-3 months. [Let me explain further with a number of charts to support my position.] Words: 460
Once every year gold and stocks form a major yearly cycle low while other commodities form a major cycle bottom every 2 1/2 to 3 years. Occasionally all three of these major cycles hit at the same time….That’s what’s happening right now and it should lead to a powerful rally over the next 2 years, culminating in 2014 when the dollar forms its next 3 year cycle low. Words: 622
Why is it that the demand for gold moves inversely to interest rates – that the higher the rate of interest the lower the demand for gold, the lower the rate of interest the higher the demand for gold? [Let me explain why and what the future seems to hold.] Words: 1053
It is my contention that the price of gold rallies whenever the U.S. dollar’s real short-term interest rate is below 2%, falls whenever the real short rate is above 2%, and holds steady at the equilibrium rate of 2%. Furthermore, for every one percentage point real rates differ from 2%, gold moves by eight times that amount per year. So if the real rates are at 1%, gold will move up at an 8% annualized rate. If real rates are at 0%, then gold will move up at a 16% rate (that’s been about the story for the past decade). Conversely, if the real rate jumps to 3%, then gold will drop at an 8% rate. [Let me explain.] Words: 982
Some gold bugs say that this is only the beginning and gold will soon break $2,000, then $5,000 and then $10,000 per ounce but the question is, “How can anyone reasonably calculate what the price of gold is?” For stocks, we have all sorts of ratios. Sure, those ratios can be off . . . but at least they’re something. With gold, we have nothing…. [or more correctly, had nothing, until the development of my very own model for doing just that. Let me explain.] Words: 945
The return of the Euro debt contagion and drop in the bond markets across the world is pushing interest rates higher and it has investors concerned and rightly so – and nowhere has the concern been more prominent than in gold. [Let me explain.] Words: 759
Many agree that the United States’ massive budget deficits and global monetary inflation support the gold bull market. I don’t see this changing in the near future. Still, sentiment is not enough upon which to rely. I need a yardstick and, for me, that yardstick is U.S. real interest rates. [Let me explain why that is the case.] Words: 1600
The “Pareto principle” – it’s often referred to as the “80-20 rule” – states that 80% of the effects of something come from just 20% of the causes (that is that 80% of people control 20% of the wealth, that 80% of sales come from 20% of your customers, etc.) and a new report by Erste Group, the Austrian investment bank, says this principle can be applied to bull markets as well, including the current bull market in gold, and following this line of thinking, you get an $8,300 price target for gold by the spring of 2015. Words: 285
According to a recent Elliott Wave theory analysis gold is about to go parabolic reaching $3,495 in June 2013, $6,233 in April 2014, $10,899 in Sept. 2014, $18,712 in December 2014 and culminating in a parabolic peak price of $31,672 on January 16th, 2015! See the chart below. Words: 600
According to my 2000 calculations, if interest rates and inflation stay constant over the next 2 years, we could expect to see (with 95.2% certainty) a parabolic peak price for gold of $4,380 per troy ounce by then! Let me explain what assumptions I made and the methods I undertook to arrive at that number and you can decide just how realistic it is. Words: 740
The interim peaks in gold have been spaced 21 months apart over the past 6 years and have seen gains from 80.2% to 97.3%. As such, given the fact that the low of this last correction came in at $1,524 four months ago, we can expect gold to reach a new peak price of $2,750 to $3,000 in 17 months time (i.e. June/July 2013). [Let me explain in more detail.] Words: 976
When considering that the conditions which propelled gold and silver to their 1980 highs are much worse today, I predict both metals will easily eclipse those previous highs. That means $2,500 gold and $150 silver at the very minimum, but more likely a parabolic ascent to $8,890 gold and $517 silver before all is said and done. Words: 1063
Gold has been moving within a mega upchannel since 1970 and still has a ways to go before reaching the top side of this mega uptrend. How high is anyone’s guess but were gold’s price rise to match the 2300% rise realized in the 1970s (and our research suggests we could see the start of the bubble phase by next year) we’d see a $6000 gold price, which would blow the gold price well above the mega upchannel. [Let us explain our conclusions with the use of 2 charts.] Words: 495